The minimum of formalities, the ease of inference and the speed of issuing decisions mean that the popularity of loans is constantly growing. Among the wide range of clients of loan companies, there will always be those who can cause problems, and thus expose the lender to losses.
Non-bank institutions have, however, developed a way to minimize the losses that customers generate if they do not pay back loans taken on time.
What is loan rolling?
Rolling out a loan is a delay in transferring the borrowed money by a certain amount of time agreed between the parties. Loan companies allow their clients to extend the repayment period many times, i.e. to postpone the loan repayment period.
Most often, the loan can be extended for another 7, 14 or 30 days. The exact conditions under which the rollover of the loan is carried out are described by each company in detail on its website and in the loan agreement.
Is rolling a debt a safe solution?
At first glance, it seems that rolling up debt is a safe option. However, you should be aware that it is costly to constantly postpone the repayment of borrowed money. Additional costs may constitute a few to even a dozen or so percent of the loan value, depending on the number of deferrals.
There are clients who have been implementing this practice for years, constantly increasing the level of their debt due to interest and costs still being charged. Debt rolling winds up the spiral of debt – it happens that the need to repay a liability together with interest and additional fees forces the borrower to take another loan to repay the previous one.
Therefore, when considering the postponement of debt repayment, one should carefully examine all the pros and cons and honestly answer the question of whether rolling out the loan will really help us pay off the debtor will be only a temporary solution to the problem.
How much does the rollover loan cost?
There is nothing for free and rolling out loans also costs you. The amount of the related fees depends on the individual arrangements of the loan company whose services we used and on the maximum delay in repayment. With the so-called Anti-usury Act, the costs of rolling a loan cannot be higher than 25% of the amount borrowed.
Some loan companies provide loan extension terms and costs already at the application stage, while others agree to them only individually with the client interested in such a service.
The amount of the loan has a considerable impact on the amount of the loan – the higher it is, the higher the costs of extending its repayment period will be. Most often, for extending the repayment date by 7 or 14 days you have to pay from 10 to 25% of the borrowed amount, and for 30 days even twice as much, from 20 to 40% of the payday value.
Either way, it is more profitable to extend the repayment deadline than to deal with the consequences of default. It is worth knowing that the late repayment of the loan has some consequences.
How to use a rollover loan?
The payment deadline is never extended automatically. Most companies only postpone repayment at the request of the borrower. It all depends on the individual arrangements of the company, but you will probably need to:
- submitting an additional application within a specified time,
- placing orders in the customer panel, by phone, e-mail or in person at the company’s branch.
To find out how to extend your repayment date at the company where you took out payday loans, read the loan agreement carefully or look for information on this topic on the lender’s website.
Keep in mind that all formalities related to this must be completed before the end of the loan period. Usually, in order for the rollover of the loan to be possible, additional conditions must be met, such as paying the appropriate amount to the lender’s account.